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First Mover Americas: Altcoin Crash May Be on the Cards
The latest price moves in crypto markets in context for Sept. 12, 2023.
Updated Sep 12, 2023, 3:16 p.m. Published Sep 12, 2023, 12:01 p.m.
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This article originally appeared in First Mover, CoinDesk’s daily newsletter putting the latest moves in crypto markets in context. Subscribe to get it in your inbox every day.
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Bitcoin reversed Monday’s decline to three-month lows under $25,000 during Asian trading hours, jumping back to around $26,000 as open interest on Binance, Bybit, OKX and Deribit fell to $4.8 billion from $5.05 billion. The decline in open interest suggests short traders were abandoning their bearish bets in what’s known as a short squeeze. The price recovery may remain capped due to a lack of immediate bullish catalysts. The bitcoin spot ETF optimism has faded, with observers shifting focus to the impending liquidation of FTX's altcoin holdings.
An altcoin crash is coming, with around $3.4 billion worth of crypto tokens likely to be sold by bankrupt exchange FTX, according to Matrixport. FTX wishes to sell $200 million worth of crypto assets a week in order to return fiat currency to users, which would mean an overhang for altcoins for the remainder of the year. “Crypto venture capital (VC) funds are also under immense pressure to return funds to their investors,” Markus Thielen, Matrixport’s head of research, wrote in a Monday report. “Those VC funds are likely to remain as crucial sellers of altcoins and must cash out.”
Bitget has established a $100 million pot to invest in exchanges, data analytics firms and media organizations as it seeks to broaden its horizons beyond its crypto trading business model. The firm said it expects tightened regulations and growth of layer-2 blockchain networks and DeFi technologies to bring about an evolution in how centralized exchanges operate. It is, therefore, seeking to diversify the services it can offer and capitalize on merger and acquisition opportunities that will be presented in the coming months. The fund, called the EmpowerX Fund, follows just months after Bitget set aside $100 million to target Web3 startups in Asian countries.
Chart of the Day
- The chart shows ether's price and Ethereum's revenue since May 2019.
- As of today, the token's price appears overvalued relative to Ethereum's dwindling narrative.
- "Fundamentals – as measured by the revenue generated across the Ethereum blockchain – have failed to pick up. This has led to a notable overvaluation of Ether prices relative to underlying fundamentals," Matrixport's head of research and strategy Markus Thielen, said in a note to clients on Monday.
- Source: Matrixport
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